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Resolution Oversight

Document Type

Editorial

Publication Date

2010

Publication Title

National Law Journal

Abstract

As the joint conference committee of the House and Senate begins the reconciliation process to produce a final version of financial reform legislation, Congress needs to pay attention to one of the most critical issues involved in responding to future fiscal crises: how to properly constrain the treasury secretary’s determination that, because of the national interest, a financial company should be terminated. Both the House and Senate bills grant the secretary the authority to initiate a Federal Deposit Insurance Corp. (FDIC)-supervised liquidation of a financial company whose failure poses systemic risk (so-called “resolution authority”) and would subject that determination to judicial review. Although including a judicial review procedure is imperative, its mere provision is insufficient. A properly designed procedure must be sufficiently robust so as to ensure the legitimacy of government intervention. Improperly exercised resolution authority would bring the demise of a financial company that otherwise could have sought renewed life through, for example, bankruptcy reorganization. Worse yet, an expansive assertion of executive power would go unchecked.

Keywords

Bankrupty, Resolution, Financial Reform

Publication Citation

Jonathan Remy Nash & Rafael I. Pardo, Resolution Oversight, Nat’L L.J., May 31, 2010, at 34

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